There is a more efficient way to buy Summit County, Colorado real estate and Breckenridge, Colorado real estate. And that is to put the horse before the cart.

In some cases, buyers will make a purchase offer for Summit County CO real estate and apply for a mortgage loan afterwards. It is far better for the buyer’s broker to counsel the buyer to apply for a loan with a reputable mortgage lender before submitting an offer for Summit County or Breckenridge real estate. The buyer can then arrange for a valuable pre-approval letter.

The reason is simple. When an offer is presented, many sellers want to know if the buyer has been pre-qualified for the mortgage loan for the Breckenridge or Summit County resort real estate.

If the buyer has not been pre-qualified, many sellers will require the buyer present a “pre-qual” letter as a contingency to the contract. This is different from a pre-qualification letter. A pre-qual letter gives many sellers a peace of mind and the impression that the buyer qualifies to purchase their property.

But is that truly the case’ In reality, a pre-qual letter is simply one step in the underwriting process. A typical pre-qual letter will state the dollar amount the buyer is qualified to borrow. But that qualification is contingent upon the lender’s final verification of information the borrower supplied, such as income, employment, savings and debt, as well as a satisfactory appraisal. True, it does show that the buyer is willing to get the ball rolling, but a pre-qual letter does not guarantee that the buyer will obtain financing.

Therefore, the horse needs to go first. What is really needed is the buyer’s pre-approval. With a pre-approval, the lender has documented, substantiated and approved the buyer’s entire loan application. This means that all of the underwriting process is complete, with the exception of the property appraisal.

When a buyer presents an offer with a pre-approval letter, it allows the buyer to approach the buying process from a position of strength. Informed sellers understand the difference between a pre-qualification and a pre-approval. In a multiple-offer situation, a pre-approval often means the difference between successfully getting the property that the buyer wants and losing out to another buyer who is better prepared.

That’s why it is important for both buyers and sellers to use the services of a broker who not only understands the differences between a “pre-qual” and a “pre-approval” but takes the time to inform and educate their sellers and buyers to the difference as well.